Operations Management / Supply Chain Management

Module 13.01 Key Concepts: Just-in-Time / Lean Principles

As indicated earlier, Just-in-time (JIT) approaches to manufacturing planning and control result in change for both manufacturing practices and Manufacturing Planning and Control execution.    JIT usually also requires fundamental change it the manufacturing layout / environment.    We will look at some of these areas in more depth here.

From a Production Layout perspective, JIT strives to reduce waste due to movement.  Large lots and long production lines with single-purpose machinery are being replaced by smaller flexible cells.   These work cells often employ U-shaped for shorter paths and improved communication.   Group technology concepts are used to help design these cells effectively.   Work Cells are further designed to be rearranged as volume or designs change.  This type of arrangement is applicable in office environments as well as production settings.  Cellular layouts facilitate both product and process improvement.

Production layout also impacts and places special requirements on employees.  Employees may be cross trained for flexibility and efficiency.  In addition, improved communications facilitate the passing on of important information about the process.   With little or no inventory buffer, getting it right the first time is critical

Reduced space requirements in facilities significantly impacts inventory requirements.  With reduced space, inventory must be in very small lots.  Units are always moving because there is no / minimal storage.

Reducing inventory uncovers the “rocks” and problems are exposed.  Ultimately with JIT there will be virtually no inventory and no
problems.  As Shingo says “Inventory is evil”.  Average inventory can be reduced by elimination of scrap and ensuring quality in product and processes.
Average inventory can be decreased through reduction in lot sizes.  The ultimate goal is a lot size of “one” that pulled from one process to the next.  Of course this may not be feasible.  Improved material handling and reduction of set-up time can facilitate / support lot size reduction.
High setup costs encourage large lot sizes.  Therefore, reducing setup costs reduces lot size and reduces average inventory.  Setup time can be reduced through preparation prior to shutdown and changeover.
JIT also significantly impacts the scheduling process.  Schedules must be communicated inside and outside the organization.  In general, level schedules are preferred and processes are designed for frequent small batches.  Freezing the schedule helps stability.  Kanban signals used in a pull type system.
Kanban is the Japanese word for card.  The card is an authorization for the next container of material to be produced.   A sequence of kanbans pulls material through the process.  Many different sorts of
signals may used, but the system is still called a kanban.
When the producer and user are not in visual contact, a card can be used; otherwise, a light or flag or empty spot on the floor may be adequate.  Usually each card controls a specific quantity or parts although multiple card systems may be used if there are several components or if the lot size is different from the move size.  Kanban cards provide a direct control and limit on the amount of work-in-process between cells.  If there is an intermediate storage area, a two-card system can be used with one card circulating between the user and storage area and the other between the storage area and the producing area.   The number of Kanban Cards is similar to “safety stock” in a way and the recommended number of cards can be determined mathematically
Kanban systems offer challenges and provide many advantages.   Small containers require tight schedules, smooth operations, little variability.  Shortages create an immediate impact. This places emphasis on meeting schedules, reducing lead time and setups, and economic material handling.  Standardized containers reduce weight, disposal costs, wasted space, and labor.
JIT processes drive for better quality throughout the operations.  JIT cuts the cost of obtaining good quality because JIT exposes poor quality.  Because lead times are shorter, quality problems are exposed sooner.  Better quality means fewer buffers and allows simpler JIT systems to be used.

The Toyota Production System often serves as the benchmark for JIT / Lean Operations.  It provides a series of standard work practices.

  • Work shall be completely specified as to content, sequence, timing, and outcome
  • Internal and external customer-supplier connection are direct
  • Product and service flows must be simple and direct
  • Any improvement must be made in accordance with the scientific method at the lowest possible level of the organization

JIT is often linked with the overall philosophy of Lean principle in an organization.   Lean operations focus is typically broader than JIT in that it is externally focused on the customer.  It starts with understanding what the customer wants and then optimizes the entire process from the customer’s perspective.  From a organizational perspective, transitioning to a lean system can be difficult. Lean systems tend to have the following attributes: they use JIT techniques; build systems that help employees produce perfect parts and reduce space requirements.   Lean system further tend to:

  • Develop partnerships with suppliers
  • Educate suppliers
  • Eliminate all but value-added activities
  • Develop employees
  • Make jobs challenging
  • Build worker flexibility

Lean initiatives are also quite supportive of the sustainability focus of a firm.  The overall goal is to maximize resource use and economic efficiency on the one hand and, at the same time, focus on issues outside the immediate firm. Driving out waste is the common ground between the two.

The JIT techniques used in manufacturing are also quite relevant to services and consider all of the following:
  • Suppliers
  • Layouts
  • Inventory
  • Scheduling